ADP 2012 Annual Report Download - page 35

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2012, cash and marketable securities were $1,665.4 million, stockholders’ equity was $6,114.0 million, and the ratio of long-term
debt-to-equity was 0.3%. Working capital before funds held for clients and client funds obligations was $1,233.3 million, as compared to
$1,252.2 million at June 30, 2011. The change in working capital compared to the prior fiscal year 2011 resulted from an increase in accrued
expenses and other current liabilities, an increase in accrued payroll and payroll related expenses, and an increase in income taxes payable,
partially offset by an increase in cash and cash equivalents.
Our principal sources of liquidity for operations are derived from cash generated through operations and through corporate cash and marketable
securities on hand. We continued to generate positive cash flows from operations during fiscal 2012, and we held approximately $1.7 billion of
cash and marketable securities at June 30, 2012. We also have the ability to generate cash through our financing arrangements under our U.S.
short-term commercial paper program and our U.S. and Canadian short-term reverse repurchase agreements to meet short-term funding
requirements related to client funds obligations. Of the cash and cash equivalents and marketable securities held at June 30, 2012,
approximately $0.5 billion was held by our foreign subsidiaries. Amounts held by foreign subsidiaries, if repatriated to the U.S., would
generally be subject to foreign withholding and U.S. income taxes, adjusted for foreign tax credits. Our intent is to permanently reinvest these
funds outside of the United States and our current plans do not demonstrate a need to repatriate them to fund our United States operations.
Net cash flows provided by operating activities were $1,910.2 million for fiscal 2012, as compared to $1,705.8 million for fiscal 2011. The
increase in net cash flows provided by operating activities was due to higher net earnings, lower pension plan contributions of $66.5 million
and a favorable change in the net components of working capital, partially offset by a variance in the timing of tax-
related net cash payments of
$162.7 million.
Net cash flows provided by investing activities were $3,243.6 million for fiscal 2012, as compared to net cash flows used in investing activities
of $7,340.6 million fiscal 2011. The net increase in cash provided by investing activities was due to the timing of receipts and disbursements of
restricted cash and cash equivalents held to satisfy client funds obligations of $9,692.1 million, a decrease of $510.3 million related to cash
used for business acquisitions, and an increase of $58.5 million in cash receipts related to the sale of property, plant and equipment and other
assets.
Net cash flows used in financing activities were $4,953.9 million for fiscal 2012 as compared to net cash flows provided by financing activities
of $5,339.2 million for fiscal 2011. The increase in cash used was due to the net change in client funds obligations of $10,017.5 million as a
result of the timing of cash received and payments made related to client funds and lower proceeds received from our stock purchase plan and
the exercises of stock options. We purchased approximately 14.6 million shares of our common stock at an average price per share of $51.26
during fiscal 2012 compared to purchases of 14.2 million shares at an average price per share of $51.52 fiscal 2011. From time to time, the
Company may repurchase shares of its common stock under its authorized share repurchase programs. The Company considers several factors
in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and
cash flows, issuances due to employee benefit plan activity, and market conditions.
Our U.S. short-term funding requirements related to client funds are sometimes obtained through a short-term commercial paper program,
which provides for the issuance of up to $6.75 billion in aggregate maturity value of commercial paper. Our commercial paper program is rated
A-1+ by Standard and Poor’s and Prime-1 by Moody’s. These ratings denote the highest quality commercial paper securities. Maturities of
commercial paper can range from overnight to up to 364 days. For fiscal 2012 and fiscal 2011, the Company’s average borrowings were $2.3
billion and $1.6 billion, respectively, at weighted average interest rates of 0.1% and 0.2%, respectively. The weighted average maturity of the
Company’s commercial paper approximated two days in both fiscal 2012 and fiscal 2011. We have successfully borrowed through the use of
our commercial paper program on an as needed basis to meet short-term funding requirements related to client funds obligations. At June 30,
2012 and June 30, 2011 we had no outstanding obligations under our short-term commercial paper program.
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